Vertical Integration Lifts Crown into the Ranks of Global Manufacturers

It’s not just an expression to say that material handling is in James F. Dicke III’s blood. His great-grandfather, Carl Dicke, co-founded Crown Equipment Corp. in 1945, along with Carl’s brother, Allen. Jim’s grandfather and Carl’s son, James F. Dicke, joined the company that same year, becoming president of Crown in 1952. Jim Dicke II then ran the company from 1980-2002. Jim Dicke III, who took over as president in 2002, represents the fourth generation of Dickes to run Crown.

Although Crown is still headquartered in the same small Ohio town where it was founded (New Bremen), today it’s become one of the world’s biggest manufacturers of lift trucks, well known not just for its product innovations but for its emphasis on vertical integration as well as continuous improvement. IndustryWeek caught up to Jim Dicke III to get his perspective on managing a family-held company that’s become a global player in the material handling space.

IndustryWeek: As a fourth-generation leader at Crown, what type of management styles did you learn from your father and grandfather, and how would you describe your own management philosophy and style?

Jim Dicke III: There is one simple philosophy that has spanned generations of our company. Honesty—doing the right thing—has always been at the forefront of how we’ve run the business with both our employees and our customers. It’s really not just business to us; rather, we see great value in building rewarding relationships. Going above and beyond for our customers is a core part of our company’s philosophy—not just as a management style but as the way we do business every day.

Our family business originally started as a manufacturer of temperature controls for coal-burning furnaces. Our path from temperature controls to antenna rotators to material handling equipment is a great lesson in innovation and collaboration. I believe there is a noticeable energy in companies that embrace innovative thinking with like-minded people to move the business forward. It’s an energy that can unite our departments and global regions and ultimately attract and retain the best customers and employees who want to continue to grow and learn.

IW: Does Crown engage in continuous improvement (lean) practices, and if so, how has that helped the company?

Dicke: Crown approaches sustainable continuous improvement through the use of a lean management system designed for quality, efficiency, effectiveness and flexibility. Our system is built on the four pillars of lean management: leader standard work, visual controls, daily accountability and leader discipline. Our team utilizes a two-pronged approach that includes team-based activities designed to boost employee engagement and formal lean deployment initiatives, such as kaizen events, 5S projects and value-stream mapping. This holistic program helps achieve the common goal of creating a superior product while exceeding customer expectations and needs regarding product quality, performance, cost and delivery.

Employees at all levels across the business are engaged in systematic continuous improvement and are the key to our success. They develop a common language, create strategies and deployment methods and measure their execution. This lean tool/system skill set and a focus on teamwork enable employees to develop an internal motivation to improve processes every day.

We’re seeing results across our business in the form of significant improvements in employee productivity, inventory reduction, inventory turns measured in hours as opposed to days and a steadily growing number of continuous improvement ideas.

IW: What advantages does Crown gain by focusing so heavily on vertical integration?

Dicke: We’re using vertical integration to unify 17 global manufacturing facilities, which enables our team to design and manufacture up to 85 percent of the components used in our forklifts. Some of the components include electric and internal combustion motors, drive units, valve bodies, masts, cylinders, forks, seats, wiring harnesses, printed circuit boards and more, which help improve quality control and supply chain coordination.

Vertically integrated manufacturing allows Crown to manage our footprint by only manufacturing what is needed—resulting in a small spare-parts inventory—and brings together every aspect of Crown’s production process to reach the common goal of creating superior material handling products for our customers. We believe we gain these advantages:

• Maximum control of the customer experience with our products and technologies.
• Flexibility to manufacture a comprehensive range of trucks that meet the specific needs of customers worldwide—and deliver them on time.
• Responsibility for employing advanced manufacturing processes and precision technology to internally manufacture forklift components that meet our stringent quality standards.
• Sustainable environmental practices that reduce waste, control costs and increase efficiency.
• Consistent global production standards for all the lift trucks and components we produce.

IW: How would you characterize the current state of the material handling equipment industry?

Dicke: I am excited about the current state of the material handling equipment industry. There is so much innovation occurring and it is happening in various parts of the industry and across the world. A few of the most notable areas of innovation include automation, data capture and analysis, energy management, and service and maintenance. Specific to data, material handling equipment can no longer be viewed as a commodity product. Each piece of equipment has the potential to function as a mobile computer that engages with nearly every part and person in a facility.

I’m encouraged because we’re seeing a growing number of companies that are willing to experiment with new approaches that challenge the status quo. That’s a good sign because it means their business is in a position to take on some risk to gain a competitive advantage.

IW: From your perspective, what is the single biggest challenge facing U.S. manufacturers?

Dicke: I believe the single biggest challenge facing U.S. manufacturers is attracting and retaining skilled employees for specialized manufacturing tasks. At the time of this interview, we have hundreds of manufacturing positions open across the world. These are new positions intended to support emerging customer needs. And we’re certainly competing for talent with many other manufacturers that are in a similar position.

I believe one of the best ways to compete in this instance is to develop the current staff with an eye toward future business needs. We have manufacturing employee development specialists on staff to customize career path plans as no one should be the same. Progress is then placed in employees’ hands as they’re encouraged to capitalize on the many training and leadership courses we offer at our Education Center.

IW: Please describe Crown’s safety efforts – for its employees as well as its customers.

Dicke: Safety is a paramount value. And, it begins with our employees who are enthusiastic and motivated. We have numerous employee teams focused on safety, including hazard communication and injury prevention. I’m particularly impressed with our SafeSteps continuous improvement program that uses employee observation, feedback and positive reinforcement to focus on the behavioral aspects of safety. Since its inception in 2005, this program has created a culture of continuous improvement that has significantly reduced both recordable and lost time injury rates.

In our customer organizations, our fleet and operator management technology is helping to create or enhance safety cultures. For example, our Crown Insite technology includes a compliance module that manages equipment access, streamlines inspections and records documentation. It has an impacts module that tracks incidents and helps to identify problem areas within a facility. What I like the most about this technology is that it enables immediate action and feedback, which I believe are required to raise awareness and change behavior.

In support of the Industrial Truck Association’s National Forklift Safety Day, we announced an initiative to call attention to forklift safety champions throughout the supply chain by celebrating the important role each person associated with the manufacture and operation of a forklift plays in making safety a priority. Utilizing the theme “I am a champion of safety,” we are raising awareness of the role of design, technology, training and individual responsibility in taking ownership of safe forklift operation.

IW: What strategies and processes are in place to help Crown manage its global supply chain?

Dicke: Vertical integration is the most notable strategy to help our company manage its global supply chain. When you are designing and making nearly every component of your product, you have more control over the supply chain because you are essentially feeding yourself.

In addition to vertical integration, our strategy has been to manufacture and store inventory as close to our customers as possible. It’s a key reason why we have manufacturing operations in Germany, China and Mexico as well as the United States. It’s also why we’re continuing to invest in strategic parts inventories for Crown Lift Trucks retail locations throughout the world.

IW: What’s the one thing you would point to as the key to Crown’s success?

Dicke: This will seem cliché but I can honestly say the key to our success has been a laser focus on our customer relationships. We don’t experience any success without our customers. We have learned a lot by listening to our customers and I know many decisions that lie ahead will be based on customer insights. As our equipment becomes more integrated and interdependent with other material handling systems within the connected supply chain, we need to ensure the technology we are designing into our products is useful and user friendly.

I believe in order to keep this focus and actually have it mean something, our entire company must be comfortable with who we are as a brand. We believe in our people, our vertical integration business philosophy and, ultimately, in the value durable, high-efficiency forklifts and material handling technology will bring to our customers. If we’re not authentic from design to manufacturing to delivery to service, we’ll lose the relationships that mean so much to us.

IW: What else would you like IndustryWeek’s readers to know about you, Crown and/or the business of forklift manufacturing?

Dicke: Many IndustryWeek readers are our customers and I’d like them to know that our company is aggressively pursuing the next generation of material handling products and technologies that will help advance their business. Forklift manufacturing today has little resemblance to forklift manufacturing when my family first started in this business. And, with our culture at Crown, we refuse to believe that tomorrow’s forklift manufacturing will resemble today's because our customers’ businesses are evolving. We will continue to evolve and lead as well.